Investopedia: TAL International One Of The Few Positive Shipping Stories

The shipping industry is full of misery these days, what with rates for tankers and bulk cargo carriers so low and numerous shipping companies finding their liquidity situation tightening badly. Container leasing a different matter entirely, though, and TAL International (NYSE:TAL) continues to build solid value for its investors.

A Respectable Fourth Quarter  
Most of TAL International's fourth quarter numbers were solid. Leasing revenue rose more than 31% from the year-ago period as leasing rates for containers have stayed quite healthy. Better still, TAL isn't frittering away this demand - adjusted EBITDA rose nearly 34%, while adjusted pre-tax income climbed more than 44%.

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Investopedia: 2011 In Review - Shipping Hit The Iceberg

What more is there to say about the state of the shipping industry for 2011 beyond words like "yuck," "blech", and "please make it stop"? Rates for all manner of ships plunged throughout the year, sometimes sinking below the daily operating costs of even the efficient operators. Clearly, an industry in which companies can't even charge enough to pay their operating costs is one that's in difficult shape, so the stock market carnage seen in this sector during the year is not exactly surprising.


Shipping was not actually the worst-performing sector this year (thanks solar, coal and banks), but a worse-than 20% drop for the sector is certainly bad enough. (For related reading, see Warning Signs Of A Company In Trouble.)

Yes Virginia, There Were Some Winners
Against a terrible backdrop, there actually were some notable winners this year - proof positive yet again that a lotus can still bloom in even the funkiest pit.


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Investopedia: Shipping A Big Mess

This isn't the first time, nor likely the last, that I've written about the tough conditions in the shipping industry. A combination of high capacity, high fuel prices and inconsistent emerging market demand, has led to low rates and high operating costs and numerous struggling companies. With the recent bankruptcy of General Maritime (OTCBB: GMRRQ) and the warnings from Frontline (NYSE: FRO) management about its own potential liquidity difficulties, it seems pretty clear that the reckoning has come for many of these companies. (To know more about bankruptcy, read: An Overview Of Corporate Bankruptcy.)

General Maritime Goes Down

General Maritime was not the first, nor will it likely be the last, shipping company to declare bankruptcy, during this downturn. There's not a lot that really needs to be said about this situation; the company had a great deal of debt, which is true for many shipping companies, and a dismal operating environment, which, again, is true for pretty much all shipping companies.

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Investopedia: J.B. Hunt - A La Intermodal

Despite concerns about economic activity, railroad volume, shipping container volume and the health of the trucking industry, goods are still getting shipped around the country and more and more of that shipping is being handled by intermodal carriers. That puts J.B. Hunt (Nasdaq:JBHT) in the driver's seat, and the company is certainly delivering strong results. 

Good Second Quarter Results, With a Catch  
In many respects J.B. Hunt had a great quarter. Operating revenue was up nearly 22% and, even excluding fuel surcharges, leaves 14% revenue growth. The company's intermodal business was the leader; growing 29% this quarter and making up nearly 60% of operating revenue. The company's dedicated contract services business also did well, with growth of 15%. Trucking was the laggard, coming in with just 4% revenue growth this period. 


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Investopedia: No Summer Holiday Yet For Rail Traffic

June's rail traffic numbers certainly offer up a mixed message. Investors and economists who believe that the recovery is in a rough patch but still ongoing can find support for their position. Likewise, those who believe that the recovery is gasping for breath (if not toppling over) can find their own "ah ha" moment in the numbers. All in all, it makes for a tough backdrop for rail and transport investors; Wall Street typically hates uncertainty and it would seem to only be a matter of time before their ongoing faith in the rails is sorely tested. 


U.S. Traffic - Some Good, More Bad
On the plus side, U.S. rail traffic did grow 0.9% from last year's June and the number of positive reporting categories (that is, traffic categories with year-on-year growth) expanded from eight in May to 14. That concludes the good news portion of today's article.

On the down side, traffic dropped again on a sequential basis (0.7%). Now, it is not all that unusual for rail traffic to slide sequentially into the summer months. If this year follows the template, traffic should bottom in July and rebound into and through the fall. 



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Investopedia: Rail Traffic Confirms A Slowing Economy

With a sour stock market since May, it seems like investors have already placed their bets on a slower economy. Now it increasingly looks like the data is validating that position. Payroll figures from Automatic Data Processing (NYSE:ADP) are pointing to an iffy job market, banks like Wells Fargo (NYSE:WFC) aren't upping their loans (and are struggling to get rid of bank-owned houses), metrics like the PMI have weakened, and now rail traffic has slowed. 


The May edition of Rail Time Indicators from the Association of American Railroads shows that carload traffic in the U.S. grew just 0.5% on a year-over-year basis and was flat with April's traffic level. Intermodal is still quite strong (up 7.5% annually and almost 1% sequentially) and came very close to setting a new record.

 Depth and Breadth a Concern
During the fat months of the traffic rebound, it was common to see every (or nearly every) rail category growing. Now that has thinned down to a point where fewer than half of the categories are growing. So while it is true that carloads ex-coal were up over 2% and ex-coal and grain were up 0.4%, the strength of the recovery has tapered off significantly. 



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Investopedia: Not All Shipping Is Sinking

Maybe it seems obvious, but a tanker ship is nothing like a dry bulk carrier, and both are nothing like a containership. Oh true, they are all very large boats and they all operate on the same underlying economic basis - ship supply, demand for carriage, day rates, contract coverage and so on. When it comes right down to it, though, it sometimes seems like there are more differences than similarities. (For a quick refresher on the state of the industry, check out Has Dry Bulk Shipping Reached Low Tide?) 


Lately, the performance and expectations of dry bulk carriers has been underwhelming. Look at the container shipping market, though, and the picture is quite a bit different. Investors here have seen largely a strong run from 2009 and many of these companies throw off good dividends as well. What's more, with a different sort of leverage to global trade than the bulk carriers, they could represent a worthwhile balance in a portfolio.

Have Boat, Will Travel
Containerization was a major development in the shipping world, allowing carriers to become far more efficient in loading, carrying and unloading cargo. Better still, a container ship can carry almost anything - as long the goods fit into a standard container, it's not a problem. So whereas a dry bulk company like DryShips (Nasdaq:DRYS) or Genco (NYSE:GNK) will devote an entire ship to iron ore or grain, a containership can holds hundreds of different kinds of cargoes at the same time.

Unfortunately, it has not always been easy to trade containership stocks in the United States. Most of the major players - Maersk, Mediterranean Shipping, CMA, Evergreen - are either private or traded on foreign exchanges. But there are still a few names that investors can play, such as Paragon Shipping (Nasdaq:PRGN), Seaspan (NYSE:SSW), Euroseas (Nasdaq: ESEA) and Danaos (NYSE:DAC). Better still for many investors, the first three pay dividends and Paragon and Euroseas have rather attractive yields. (For more, see Dividend Facts You May Not Know.)


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